7th Pay Commission Latest News – What was initially seen as a scoop that exposed the attempt of Indian Budget 2016 to understate Deficit Numbers was later confirmed to be not true thanks to Livemint’s study on Budget Allocation for 7th Pay Commission recommended increase in pay and pension of Central Government Employees and Pensioners

Bloomberg business which is a TV and internet media had reported that an Amount equivalent to US$ 15 Billion which is to be paid to CG Employees and Pensioners as result of implementation of 7th Pay Commission report in the year 2016-17, has not been taken in to account in the Budget 2016-17.

Boomberg reported this News with much hype and titled it as : “Missing: $15 billion lost somewhere in India’s 1,500-page budget” .

In response to this, Livemint has now come up with a comparison study on budget allocation for pay and allowances Central Government employees in 2015-16 and 2016-17

A Bloomberg report on Wednesday titled “Missing: $15 billion lost somewhere in India’s 1,500-page budget” raised a red flag on the Indian government’s balancing of its books in Budget 2016. It pointed out how the global financial data provider and other analysts were unable to locate the numbers allocated for implementing the recommendations of the Seventh Pay Commission (SPC), which doles out the once-in-10-years pay hike given to central government employees. The allusion was the government may have understated this payout—and, by extension, its deficit.

“We tried to locate those “missing” numbers in the same budget documents. First, we need to know how much it will cost the government to implement the SPC recommendations. The estimate for 2016-17 by the SPC is a 24% increase in payouts to government employees, or Rs.102,100 crore (around $15 billion).

The first place to look for is under non-plan expenditure, and a table titled “Estimated strength of establishment and provision thereof”. This details how many employees are there in 56 government departments (excluding defence) and how much the government has budgeted to pay their salaries: an increase ofRs.65,690 crore in 2016-17. Thus, we have accounted for around 65% of SPC’s impact.

The second place to look for is pensions, the details of which are again provided under non-plan expenditure. This shows the government has budgeted for an increase of Rs.37,066 crore.”

Thus, the total increase in salary and pension bill in 2016-17 is Rs.102,756 crore. However, there is one rider. The pension liabilities include increased outgo on account of implementing the One Rank One Pension (OROP) scheme.

Implementing OROP is estimated to cost the government Rs.7,500 crore. Deducting this amount means the government has budgeted Rs.95,256 crore to meet SPC recommendations. In other words, the net shortfall in budget estimates on account of implementing the SPC is Rs.6,844 crore.

What’s “missing” is $1 billion and not $15 billion.”

Here is an Infographics that explains Livemint’s report which negates bloomberg’s report